You have saved for the down payment, chosen a safe neighborhood, and found a great property at a reasonable price. Purchasing your rental property should be the most complicated part of the process. However, protecting yourself legally against the liabilities that come with renting out a property and protecting your newly purchased asset can be just as if not more complicated than buying a property. While there are a few different financial tools that you can use to achieve these goals, a revocable living trust is one of the best options.
Revocable Trusts and Rental Properties
A revocable trust is a great option if you have any type of property, as this tool allows you to transfer the asset to your friends or family without having to go through probate and save on estate taxes. Further, by avoiding probate, trusts also speed up the property transfer process, so that your family can have access to your property faster. However, there are a few specific benefits that trusts offer for those who own rental properties.
First, placing rental properties you own in a trust gives you an extra layer of anonymity. In most cases, once your property is in the trust, the name of the owner cannot be revealed without a court order. This can help to deter unnecessary lawsuits that tenants or neighbors may try to bring against you.
Other additional benefits placing a rental property in a trust brings include helping to define ownership of the property if there are multiple investors involved.
Finally, while a revocable living trust is the most common type of trust for rental property, some investors rely on the following types of trusts instead.
- Domestic Asset Protection Trust
- Land Trust
- Qualified Personal Residence Trust
Final Thoughts
A revocable trust brings so many benefits, including allowing one to still have the power to make changes to the property while lessening their personal risk and tax burden. However, it is vital to set up a trust properly. With over 20 years of experience in both estate planning and real estate law, the attorneys at Antonoplos & Associates can help you set up a trust and quickly transfer your rental property into this financial tool.